North Korean Economy Watch

Joong Ang Daily
11/18/2006

Eight years have passed since the first tourist from South Korea entered North Korea to explore Mount Kumgang, one of North Korea’s most scenic mountains, but the picture at Hyundai Asan, operator of the tour program, is not so picturesque.

Demand for the tour has plummeted after North Korea’s nuclear weapon test last month.

Only 22,000 tourists visited Mount Kumgang in October, a popular fall season. Originally, 40,000 made reservations but almost half canceled because of the nuclear test.

For the first 10 months of 2006, a total of 226,000 tourists have visited the North Korean mountain, 20 percent less than the previous year and well below the company’s target of 350,000 for this year.

“Next year the tour area will be expanded to inner-Kumgang, and a golf course will be ready in May. We expect to attract more tourists,” said an official from Hyundai Asan.

Meanwhile, two conservative citizen groups, Right Korea and the Citizens’ Coalition to Stop Nuclear Development of North Korea, rallied Thursday. They want the tours stopped, saying it is a source of foreign currency for North Korean dictator Kim Jong-il.

From Yonhap
11/1/2006
Yonhap

North Korea on Wednesday said it would take “stern measures” against South Korea following any changes to a tourism program to the North’s Mount Geumgang, a South Korean project recently accused of funneling hard currency to the communist state.

“Foul attempts are underway in the South by (South Korea’s) Grand National Party to destroy the Mount Geumgang tourism project, which is a symbol of North-South economic cooperation,” said a spokesman for the North’s Korean Asia-Pacific Peace Committee in a statement carried by the country’s Korean Central News Agency.

“We will always treasure the hope and wish of South Korean peoples toward Mount Geumgang, but we make it clear that we would have no choice but to sternly take corresponding measures if an irreversible situation is created by the Grand National Party,” it said.

The statement follows claims by the South Korean opposition party that cash paid to the communist nation in return for the North’s opening of the inter-Korean border to allow South Korean tourists to the mountain could be helping the North’s nuclear and other weapons of mass destruction programs.

The opposition’s claims and demands to halt the inter-Korean project intensified after Pyongyang conducted a nuclear test on Oct. 9, defying all international warnings and appeals.

The U.N. Security Council has adopted a resolution on North Korea that prohibits the transfer of any financial resources or other materials that could benefit the North’s weapons program.

Seoul refuses to shut down cross-border roads to the North Korean mountain and a North Korean border town, Kaesong, where the two Koreas are jointly developing a large-scale industrial complex for South Korean firms.

Hyundai Asan, the South Korean developer of the Mount Geumgang resort, pays an average US$1 million a month to the North Korean committee in admission fees for South Koreans traveling there, while the country’s firms operating at the Kaesong complex are paying about US$600,000 each month in wages to some 8,700 North Koreans working there.

One of the ways, partly proposed by the opposition GNP, to cut currency inflows to the communist nation was to pay the fees and wages in goods, instead of cash.

The North, however, said the idea is not even worth mentioning, saying it is as outdated as it is absurd.

“The Grand National Party, which puts the interests of foreign forces before those of the nation and tries to realize its scheme to take power by violating the nation’s interests, would pay high prices,” the North Korean statement said, adding the country will closely watch South Korea’s move.

From the Joong Ang Daily:
10/19/2006
Seo Ji-eun

Hyundai Asan Corp. is facing another tough challenge to its Mount Kumgang tour operation amid mounting pressure to suspend business due to suspicions that it has inadvertantly helped North Korea develop nuclear weapons.

So far the company is still in business, but it may be forced to withdraw.

U.S. Assistant Secretary of State Christopher Hill said on Tuesday that the Mount Kumgang tour “seems to be designed to give money to the North Korean authorities.”

According to Hyundai Asan, North Korea has received up to $457 million since 1999 in return for allowing Mount Kumgang tours.

Experts point out that the reason the United States opposes the tourism business while not objecting to the Kaesong Industrial Complex, also operated by Hyundai Asan, is because the majority of payments from the tour company go directly to the North Korean government. Kim Sung-han, head researcher at the Institute of Foreign Affairs & National Security, said, “The United States views the Kaesong Industrial Complex as acceptable in that the major portion of capital injected into that project consists of labor costs of the North Korean workforces in actual operation there. However, Mount Kumgang is understood as being mainly for the sake of the regime.”

Political critics speculate that U.S. Secretary of State Condoleezza Rice, in a meeting with the President Roh Moo-hyun scheduled for today, may officially request a halt for the program. There is speculation of a second North Korean nuclear test, which would likely increase international sanctions against the North.

Officials at Hyundai Asan are discussing ways to retain the tour business, which accounted for 40 percent of revenue last year. Tourists to the scenic resort in the North have sharply decreased of late, making it hard for Hyundai Asan to achieve its annual goal of 350,000 visitors.

The North Korean business arm of Hyundai Group is mulling the delivery of rice, medicine and fertilizer to sustain cash flow and quell notions that it is aiding North Korea.

An executive from Hyundai Motor Co. said, “We are afraid consumers in the United States might be confused. We have no choice but to explain that Hyundai Motor and Hyundai Asan belong to different groups.”